Tesla’s profits plummet to five-year low as Musk pays the price of Trump

Tesla’s profits have plummeted to a five-year low as the electric car company counts the cost of Elon Musk’s alliance with Donald Trump and the US president’s trade war.

The electric car company’s net income slumped by 71 per cent to $US409 million ($642 million) in the three months to the end of March, marking its least profitable quarter since 2020. Sales came in at $US19.3 billion, down 9 per cent and well below market estimates.

Elon Musk’s close alliance with Donald Trump and his MAGA movement is hurting Tesla’s profits.Credit: AP

The figures lay bare the financial impact of the Tesla chief’s enthusiastic support for Trump. Left-wing drivers have mounted a boycott of the company’s cars in response to his decision to take a position in the Trump White House, and the president’s tariffs are also hurting the business. The sales slump has prompted questions over whether the billionaire’s association with Trump’s MAGA movement has done permanent damage to the brand.

Despite the shock result, Tesla’s shares rallied more than 5 per cent in after-hours trading after Musk told analysts he would start to pull back “significantly” his work with the Trump administration from May.

“I think starting probably next month, May, my time allocation to DOGE [the Department of Government Efficiency] will drop significantly,” he said in a conference call. He predicted he would continue his involvement to some extent in the Trump administration for “the remainder of the president’s term”, but would soon be allocating more time again to Tesla. Musk also said he would continue to advocate for lower tariffs.

Before the earnings call, the company had warned that “uncertainty in the automotive and energy markets continues to increase as rapidly evolving trade policy adversely impacts the global supply chain and cost structure of Tesla and our peers”.

Musk and President Donald Trump in the White House in February.Credit: AP

Tesla also admitted that “changing political sentiment” was damaging sales. Deliveries of its vehicles fell 13 per cent in the first three months of the year, Tesla reported earlier in April.

The company warned that the twin impact of tariffs and boycotts “could have a meaningful impact on demand for our products in the near term”.

The results came hours after US Treasury Secretary Scott Bessent said that America’s trade war with China was not sustainable, telling a JPMorgan investor summit there was “a big deal to be done”.

The admission is a sign that officials are growing wary of the economic cost of Trump’s aggressive trade war, which has prompted a sell-off of US stocks, debt and the US dollar.

The car company’s stock is still down close to 40 per cent on record levels it achieved in December after Trump’s White House victory.

A combination of stalled demand for electric cars, tariff fears and consumer anger over Musk’s zeal for the MAGA movement have all dented investor confidence in the billionaire’s electric car company.

Liberal EV buyers have boycotted the business, with sales plunging among Democrat-voting Americans and in European countries that have attracted the ire of Trump’s regime. Falling sales have forced the company into offering generous discounts, further hurting its profits.

Meanwhile, Musk’s company has been the target of repeated “Tesla takedown” protests by anti-Trump supporters across the US and Europe. Vandals have defaced the company’s showrooms and burnt its cars in what US officials have labelled a wave of “domestic terrorism”.

In 2024, Tesla was surpassed by China’s BYD as the biggest producer of EVs, and it has faced relentless pressure from new Chinese brands, while traditional car makers have ramped up their own efforts to produce green vehicles.

Musk has since sought to re-focus Tesla on the potential of robotic taxis, humanoid robots and AI.

However, his embrace of Trump and role as a White House adviser, leading cost-cutting in the Department of Government Efficiency, has prompted investor fears that he has failed to spend enough time on the $US700 billion company’s core car business.

Dan Ives, an analyst at Wedbush Securities who has been historically upbeat on Tesla’s prospects, warned last week of a “code red” at the company and called for a “turnaround vision” from Musk.

Ives has said the company faced “permanent demand destruction” of up to 20 per cent among future Tesla buyers due to his association with Trump’s presidency.

Supporters of Musk believe the company is on the brink of a fresh phrase of growth, with plans to launch a self-driving taxi service featuring a new vehicle in Austin, Texas, as soon as June.

The billionaire has also promised to begin production of its humanoid Optimus robot later this year. The bipedal robot is designed to perform mundane or dangerous tasks.

However, other analysts are sceptical about the prospects of these ventures. Gordon Johnson, an investment analyst at GJH Research, wrote in a note to clients it would take at least five to 10 years to see profitable robotaxis or humanoid robots, “if ever”. “Even the ‘Tesla faithful’ are beginning to lose patience,” he added

Tesla is the first of the so-called “magnificent seven” technology stocks to report its results since Trump’s “Liberation Day” on April 2, where he unveiled sweeping tariffs on America’s trading partners. The other companies in the group are Apple, Amazon, Microsoft, Meta, Google and Nvidia, with results due over the next few weeks.

The Telegraph, London, with Bloomberg

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